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(Reuters)
– Procurement of solar energy by U.S. utilities “exploded” in the first
half of 2018, prompting a prominent research group to boost its
five-year installation forecast on Thursday despite the Trump
administration’s steep tariffs on imported panels.

A record 8.5
gigawatts (GW) of utility solar projects were procured in the first six
months of this year after President Donald Trump in January announced a
30 percent tariff on panels produced overseas, according to the report
by Wood Mackenzie Power & Renewables and industry trade group the
Solar Energy Industries Association.

As a result, the research
firm raised its utility-scale solar forecast for 2018 through 2023 by
1.9 GW. The forecast is still 8 percent lower than before the tariffs
were announced. A gigawatt of solar energy can power about 164,000
homes.

Procurement
soared in part because the 30 percent tariff was lower than many in the
industry had feared, the report said. SEIA strongly lobbied against a
tariff, saying it would drive up the cost of solar and hurt the
industry’s robust job growth.

In addition, panel prices have
fallen faster than expected because China pulled back its subsidies for
the renewable power source in June, creating an oversupply of modules in
the global market that has eroded the impact of the tariff.

Module
prices averaged 42 cents a watt in the second quarter, the report said,
2 cents higher than the same period in 2017 but far below the 48 cents a
watt they hit late last year as the industry fretted about a looming
duty on imports.

In
every segment of the market except residential, system pricing is at
its lowest level ever, the report said. Utility projects make up more
than half the solar market.

Utilities are eager to get projects
going because of a federal solar tax credit that will begin phasing out
in 2020. Next year will be the most impacted by the tariffs, Wood
Mackenzie said. Developers will begin projects next year to claim the
highest level of tax credit but delay buying modules until 2020 because
the tariff drops by 5 percent each year.

In the first half of the
year, the U.S. installed 4.7 GW of solar, accounting for nearly a third
of new electricity generating capacity additions. In the second
quarter, residential installations were roughly flat with last year at
577 MW, while commercial and industrial installations slid 8 percent to
453 MW.